It is the back to school season and children have undoubtedly asked for the latest, greatest gadgets and clothing before seeing their school friends again.
One lesson could give kids the confidence to start the school year off well, and stay with them until their adulthood: financial budgeting.
Financial lessons can start young with simple concepts around budgeting, saving and giving. For example, parents/guardians can give students a list of items needed for the month (such as a bus pass, school supplies, clothing, etc.) along with a budget to which they must adhere. Within that budget, however, they must also learn to keep some of the money aside for savings, and either donate or gift another portion of it. These are three strong principles to instill at a young age, which many financial experts agree.
For older students, budgeting lessons can be more complicated and revolve around credit – a skill that is very important to learn in this digital era. Parents need to help their children learn to use credit responsibly. They can teach them about the difference between paying off an entire credit card bill versus only paying off the minimum payment. It is an opportunity to show children how long it will take to pay off a debt if only the minimum payment is being met.
With healthy spending habits and understanding credit in today’s world, students will have a great basis as they move towards adulthood.
In my experience working with single people and young families, those with good credit have likely been building it since a young age. With good credit, it is that much easier to apply and qualify for a mortgage at a lower rate saving them money in the long run. Financial health is important in adulthood but many lessons are learned at a young age.
Enjoy the beginning of the Fall and helping your children learn valuable lessons around finance.